ST : HDB flat dilemma for PRs and Singaporeans with property abroad

Sep 3, 2010

HDB flat dilemma for PRs and Singaporeans with property abroad

By Esther Teo & Jessica Cheam



PERMANENT resident (PR) Michael Lim is keen to upgrade to a larger HDB flat but the new rules on dual property ownership have put him in a pickle.

Mr Lim's problem is that he also owns a condominium in Kuala Lumpur that he inherited when his father died. Previously, this would not have hindered his purchase of a resale flat. But now it will.

The HDB announced on Monday that people who buy an HDB resale flat on or after Aug 30 must dispose of their private property - including any held overseas - within six months of the HDB purchase.

The intention is to ensure that HDB flats go to owner occupiers first and are not viewed as an investment. This means Mr Lim, who has been living in Singapore for 10 years, must sell the condo in Kuala Lumpur if he wants to upgrade from a four-room to a five-room HDB flat to fit his family of four.

But his mother-in-law is living in the condo and he has no plans to sell it.

Mr Lim, 33, hopes the HDB will make an exception in his case, given that he did not buy the condo as an investment.

'Malaysia is also our home and it's weird if we go back and do not have a place to stay... It's not fair to make me choose when I have ties to both countries.'

Ms Bhavani Prakash, 40, a PR from India who has a home in Chennai, said the new rules will also deter her from buying an HDB flat.

'The measures are quite draconian. Whether someone owns a property overseas really does not have an impact on the Singapore market... There are other ways to counter speculation,' she said.

There are many other PRs who could find themselves in a similar dilemma.

Experts say a significant number of PRs still have homes in their native countries since overseas properties are often cheaper than real estate here and are not as great a financial burden. A number of them may also have families back home living in those properties.

Ms Prakash's Chennai condo cost her between $200,000 and $300,000 - a quarter of the cost of a suburban condo in Singapore.

ECG Property chief executive Eric Cheng estimates that 40 per cent of PRs - especially those from Malaysia - own homes abroad, while PropNex chief executive Mohamed Ismail puts the figure at up to 30 per cent.

ERA Asia Pacific associate director Eugene Lim believes that more than half of the PRs arriving over the past few years would still have properties back home.

The curbs could also catch out Singaporean retirees with property offshore that they had bought for rental income or retirement. With strong family ties and business connections here, they might also be looking at buying HDB flats for their frequent visits here.

Now, if they want to buy a resale HDB flat, they will have to dispose their overseas real estate or risk penalties by trying to dodge the new rules.

Despite the tougher measures aimed at cooling the property market, a 99-year luxury project, Dorsett Residences, above Outram MRT Station was sold out in one day when it was launched at an average price of $1,800 per sq ft yesterday. But The Straits Times understands that 40 per cent of the 68-unit project was bought by a single buyer.